Apple Says YouTube Is “Built On the Backs of Free, Stolen Content”

YouTube faces its strongest accusations to date, from one of the biggest companies in the world.

Apple has now joined a chorus of voices decrying YouTube, accusing the company of profiting enormously while ruthlessly exploiting artists. The tough accusations came during a roundtable interview with several top Apple executives at WWDC in San Francisco, with Apple senior vice president of Internet Software and Services Eddy Cue, ‎vice president of Content and Media Apps Robert Kondrk, Apple Music Chief Creative Officer Trent Reznor and head of Apple Music Jimmy Iovine answering questions.

On the topic of YouTube, Reznor, now a top Apple Music executive and visionary, offered this indictment:

“Personally, I find YouTube’s business to be very disingenuous. It is built on the backs of free, stolen content and that’s how they got that big. I think any free-tiered service is not fair. It’s making their numbers and getting them a big IPO and it is built on the back of my work and that of my peers. That’s how I feel about it. Strongly. [Apple Music is] trying to build a platform that provides an alternative — where you can get paid and an artist can control where their [content] goes.”

The accusation comes alongside dozens of complaints from artists, including top-ranked artists like Thom Yorke, Adele, Nelly Furtado, and Nikki Sixx of Mötley Crüe, just to name a few. But the industry itself is also starting to rally: Apple Music executive Jimmy Iovine has previously criticized the platform, and well-known artist manager Irving Azoff has more recently blasted Youtube for exploitative practices.

But YouTube has blasted back on two fronts: first, the video platform says that overall music viewing is proportionately quite low, and royalties are proportionately high. Back in late April, YouTube claimed that just 2.5 percent of its overall traffic is music-related, with music videos drawing just one hour a month from the average viewer. “The final claim that the industry makes is that music is core to YouTube’s popularity. Despite the billions of views music generates, the average YouTube user spends just one hour watching music on YouTube a month,” Christophe Muller, head of YouTube International Music Partnerships, emailed Digital Music News. “Compare that to the 55 hours a month the average Spotify subscriber consumes.”

Robert Kyncyl, YouTube’s Head of Content, has criticized ‘apples to oranges’ comparisons while pointing to roughly $3 billion in cumulative royalty payments to artists.

Apple can claim far more, and a far different business model. Outside of a limited free trial, Apple Music is paid only, with 15 million paying subscribers recently announced. Other platforms, including Spotify and SoundCloud, harbor enormous ‘freemium’ populations, and were alluded to by Reznor.

Imagine if Tim Cook said this at an investor meeting: ‘Personally, I think we should shut down Apple and make it into a self-driving company tomorrow, we’d have a lot more fun and we have billions! But that’s just what I believe personally…”

Agreed. Meanwhile Apple sold over 400 million ipods between December 2001 and December 2014 representing hundreds of billions of dollars in revenue, where it’s estimated that over 97% of the content on them was downloaded off p2p or bit torrent. Not ONE PENNY from those ipods went to creators. This is the pot calling the kettle black.

Except they wouldn’t. Google rarely sues anyone for anything. That’s the difference between Google and Apple. Apple likes to sue their competition. Google likes to outplay them with real innovation. And it is clearly working with their search engine, Google Fiber, Android, Chrome, and yes even Youtube.

I find that statement very misleading. Google jas frequently initiated legal actions through third party proxies like the EFF. Always makes me feel like they don’t want their users or the press to be aware of their end game. When combined with the frequent legal briefings and lobbying efforts they also engage in, and its clear just how hard they work to ensure the law is interpretted in a way that benefits their bottom line, even if it harms others.

Seeing as this comment shows neither clue nor concern for any of the issues here, it’s probably easier to just call it “stupid conspiracy shit”. I wonder if this plays better off on some gaming site than DMN.

Nice to know at least that the commenter won’t be too inconvenienced when the music comes off of YT.

Is this the same Trent Reznor that in May, 2007, criticized the music industry, Universal Music Group in particular, and urged his fans later in September, 2007, to “steal his music online instead of purchasing it legally?” And further to “steal and steal and steal some more and give it to all of your friends and keep on stealing?”

See, Wikipedia: The Free Encyclopedia: Trent Reznor/Criticism of the music industry

“[A]nd an artist can control where their [content] goes[?]” How gullible does “top Apple Music executive and visionary” Trent Reznor think that the songwriters and recording artists are? How many discussions have been had over the years on DMN alone regarding the inability of songwriters and recording artists to control where their content is distributed, among other things, by both the publishers and the record labels.

Trent Reznor is “no babe in the woods” when it comes to such knowledge as he has signed numerous agreements with both publishers and record labels in the past (and accepted those cash advances and payments). He knows very well how the music industry works, and he knows that unless he receives permission from his contract holders, that he has no authority to remove “his content” from any distribution platform for example unless, and until, either his contract expires, he is released from the terms of those contracts, or otherwise mounts a successful challenge to those contracts in an appropriate court of law.

Most, if not all, contract and work-for-hire songwriters and recording artists know this already. “Points,” may, perhaps, be made in the “court of public opinion,” however, as most of the readers of DMN and others know, “you can fool the fans, but not the players” may be applicable in this instance.

If I am incorrect, in this regard, I am sure the DMN readership will point that out.

““[A]nd an artist can control where their [content] goes[?]” How gullible does “top Apple Music executive and visionary” Trent Reznor think that the songwriters and recording artists are? ”

@Lest it be forgotten… : He also self-released a LOT of music, so his comments totally apply to a huge number of self-released no-label musicians. In fact he was at the forefront ( along with other acts) of experimenting with all sorts of distribution strategies ( the old Topspin platform, wich I think is older than Bandcamp ). I think he is spot on.

PS: Like other commenters said, his comments are Reznor’s opinion, not an official Apple position. Apple employees are still allowed to have personal opinions , as far as I know…

Yep. He and Yorke have a lot to answer for. On the other hand, it was an innocent time then for artists and their relationship to the internet. The exploitation monopoly was in infancy. Who would have thought it could end up worse than the labels ever were. But the jig is up and at least they seem to have their heads on straight now.

Amazing what a DMN comment section will dredge up. Total hypocrisy is always fun. I also love it when big artists publicly criticize the very label that made them famous. You wouldn’t even be reading this if it wasn’t for the major label that screwed me.

at the time, the record label and the stores had a larger price tag on the cd, or vinyl. they were ripping people off. if you are going to make a point, don’t leave out vital details that give context. i’m sick of seeing people manipulate what others say.

record labels were ripping off the fans of nin, the record labels also knew that the loyal fan base would pay more just to have it.

As per usual, major label artists and DMN commentators miss the forest for the trees. In terms of the overall question of “streaming” – it’s merely a placeholder to attempt to monetize some value from recorded music. Streaming is not profitable because the recorded music industry ended years ago. How can you make a profit from a product that is free – a product that the public considers to be free?

Apple Music is gaining subscribers not because it is a superior product, but because it is convenient. The gradual and deliberate phasing out of iTunes has nothing to do with helping the artists but is only to the benefit of Apple. Apple Music benefits from branding, stronger marketing, and the seamless integration into iPhones.

A simple analogy can be made between bottled water. Many people purchase bottled water and it is a successful industry even though tap water is available as a low-cost utility, to many, essentially free. People pay for convenience and a perceived (true or not) superiority. Some prefer Poland Spring, some prefer Fiji, and so on. Some are happy with tap water.

Water, of course, is vital to survival whereas music is not (I know the studies that say people consider music high on their list of ‘important things’). Prioritizing it (music) as such, the different streaming services are like different bottled water companies. Some cater toward high-fidelity (Tidal) and some the bare minimum (Spotify). The difference of course, is that YouTube does not play by the same rules as the rest on the surface. The ability of users to upload music themselves adds an unpredictable variable to the mix, one which YouTube chooses to ignore.

YouTube is the municipal water company if they gave bottled water away for free.

The music industry has been playing this whack-a-mole game for over 15 years. You take out YouTube (good luck with that) and you’ll still have piracy to contend with. Yes, the relative convenience of Spotify may deter some, but piracy will still exist. It’s not something that can be eradicated but rather tamed.

The major labels realized some time around Spotify’s U.S. release, perhaps even during the YouTube disputes in the mid-to-late 2000s, that they could no longer depend on the traditional record-sales model. Rather than take the combative stance they took against Napster and Pirate Bay, they decided to leverage their catalog for cash advances, advertising and other perks (to help promote their artists), and a percentage stake in the company. It’s a fantastic solution for the bottom line. You effectively cut out the artist from the negotiations and the payouts and get paid upfront. It’s not as much as you would have made in the 90s, but it’s far better than any other deal. All of this allows the labels to make a considerable amount of money whilst preparing for the inevitable IPO which, because of the % ownership the labels have, will net them a significant payout.

So the big three and the RIAA can point fingers at Spotify, YouTube, and all the other tech companies (all of which, to a degree, is justified) and let songwriters, artists, and music creators kick and scream and fight about how unfair they are being while the labels are pushing the music industry closer and closer to the edge. That’s not a defense of the tech companies that have built their businesses on “the backs of free, stolen music” as Trent Reznor says, but just because the tech companies are exploiting artists does not suddenly make the major labels their best friend.

The labels are not as helpless as they claim to be. If they truly had an issue with YouTube, they could pull their music off the service at the end of their contract and demand higher payouts. That doesn’t guarantee YouTube would agree, but out of everyone, the record labels have the most leverage to enact a change. It is incredibly naive to think that the labels have nothing to gain from this arrangement and that they have no options. There are plenty of Top 40 pop songs that are difficult to find on YouTube, so it seems to be a matter of who is asking for takedowns.

It’s the same story over and over again and I’m so sick of reading about. I’m a 22 year-old rock musician and I cannot believe I’m living to see the recorded music industry tank not once, but twice, when downloads inevitably are cannibalized and die off.

Artists need to stop deferring to other people – record labels, lawyers, managers, businessmen, etc. I am astounded by the readiness of artists to give away their rights to record labels, publishers, managers, tech companies – to anyone who will validate them or offer them a “chance.” Without artists, there is no industry other than the manufactured Top 40 major label plastic pop stars with X songwriters and X producers all controlled by the label. Why sign the next David Bowie or Prince who will rebel against you and eventually outgrow you – who does not need you to create – when you can sign a talentless pretty face who you can manufacture (and thus own the majority of copyrights, publishing, merch, etc. and thus gain more revenue) who will always need you. Much less risk and no need for artist development. Rinse and repeat every two years.

To blame someone like Trent Reznor – who arguably has been more supportive of independent artists than most who lament about the state of the music industry (I’m looking at you Dave Grohl and Joe Walsh) while doing nothing to help young artists they so woefully complain aren’t being given a chance. He’s doing what’s best for Trent Reznor and his brand, while hopefully regaining some of his masters in the process of this reconciliation and perhaps some funding for his music. That’s not to say he is being altruistic – he’s not, and neither are the folks at Tidal – but it doesn’t hurt to have someone like Reznor – or any of the other artists who stand up to streaming companies, record labels, or tech – with a voice in the process.

Unless artists can collectively educate themselves and band together, things will largely remain as is.

And how do you recommend intellectual property owners and creators enforce these laws effectively? You clearly did not read my entire post, because it’s that same naivety and cluelessness that has prevented any real monetization solutions from being implemented.

The music industry should have forced the ISPs to pay after Napster or worked with cell companies (as was discussed around the time) to add tax. That might still be a reasonable solution – to add an extra tax or charge on ISP and cell phone bills that would becoming the new ‘royalty rate’ for digital music.

You’re not going to get the majority of consumers to pay for music like they did in the 20th century. It’s not going to happen.

I’ve come to respect Versus’ perspectives after reading his contributions over time.

This feels like a false choice. Can’t we work to enforce the law more effectively AND accept that illegal privacy won’t ever be completely eliminated?

Personally.. I’d rather deal with illegal pirates than legalized pirates like YouTube. At least the law is likely to benefit our efforts when fighting the likes of Pirate Bay. If we can actually pass and implement a “take down and stay down” with teeth, I think this could help move the industry back in that direction.

YouTube can be a VERY valuable promotional outlet… if they empower me to limit the content that is available to materials that are explicitly intended for promotional purposes. The availability and influence of sites like Pirate Bay can be reduced… but prosecuting individual users is both silly and wrong.

Trying to force every choice into “A” OR “B” seems unnecessarily limiting. There can be a lot of value in the nuance between polar opposites.

Piracy existed long before P2P or YouTube. The only difference it was largely relegated to physical products that most of the time did not match the actual product.

I completely agree with you in that legal pirates (like YouTube) need to be taken care of. I don’t buy into this whole ‘streaming prevents piracy’ argument. Having easy access to free content will help prevent people from stealing anything, of course. That’s fairly common sensical. What Spotify and others fail to mention is that the complexities of what allows piracy to thrive (a combination of laws, modern services, and ease of access) need to be revised and dealt with in the right ways (as you said, not suing individual users).

The good old RIAA ‘let’s sue everyone and shame everyone into buying music’ didn’t work out well the first time. There have been plenty of studies since the Internet and social media that the psychology of how people behave on the Internet (i.e. hateful comments, trolling, etc.) versus real-life is completely different. Trying to argue that stealing music on the Internet is morally wrong is so incredibly ineffective as we’ve seen, that I won’t say any more about it.

As Troglite correctly points out, we need to STOP thinking about this in terms of black or white. Don’t throw the baby out with the bathwater – even with YouTube! Although I empathize with music industry veterans, especially songwriters, producers, and engineers, who are having trouble monetizing their work and making a living, you have to realize that the average person DOES NOT CARE if you are not making what you made 15-20 years ago! I’m really sorry, but they just don’t. The consumer is just not going to spend $15-$20 on an album unless you’re Adele or Taylor Swift. That doesn’t mean no one will – Pledge Music and Kickstarter are great ways to get paid upfront – but you can’t expect your debut album to sell hundreds of thousands of copies anymore. Believe me, I wish it were not the case.

If we can have an honest conversation and perhaps force companies like YouTube, Spotify, and Apple Music to pay fairly rather than laying it on listeners, I think we’ll have more success. The first obstacle to that is breaking away from the major label system, which sadly gets a lot of these equity/catalog advances which do not get passed on to the artists, songwriters, producers, or engineers – the music creators. It’s difficult, because they hold all the power in terms of catalog. Obviously, if all artists owned their masters, it would be a completely different story.

It’s why it is VITAL for artists of all ages, especially young ones who have not yet signed their rights away, to EDUCATE themselves about copyright, contracts, and the music business as a whole. Stop deferring to businessmen and companies that view you only as $$$ signs on quarterly reports and expecting them to care about you. I promise you, it is not that hard to learn about the music business and being a businessman or businesswoman and an artist are NOT mutually exclusive.

– Your suggestion of a tax (presumably similar to the blank CD or tape taxes of yore) is a way to get consumers to pay for music
– Such a tax has a problem of scaling, of course; if the tax is fixed, but the number of streams is completely variable, then the payout per stream is completely unpredictable (and can tend towards 0)
– Agreed that creators (musicians, writers, composers, producers, etc.) must work together, especially considering the “backroom” deals that labels make with streaming services that may allow them to profit even if those services collapse or never profit in the way ostensibly intended. However, how to do that without some created collective body? Would you recommend something like a formal music union? Or existing organizations like ASCAP, BMI, SoundExchange?

Your argument depends greatly on the span of time you’re referencing. Musicians in 1860 would never have expected the monetization that came in the latter part of the 20th century. In another 100-120+ years, how could anyone quantify the future of the music industry, let alone the planet?

Although my bottled water analogy has some similarities to the music industry, it’s applicable only in the most basic ways. If there was suddenly a way to get high-quality, or even mid-quality, bottled water from your tap, or an easy equivalent, for free – then of course the bottled water companies would be in trouble.

I see no way in the next 5 years unless there is another significant shift in the way people listen to and consume music (which is inevitable) that we could even come close to the height of music sales. That’s not to say that music is inherently worth less, but the price consumers are willing to play largely varies on their interest (casual listeners vs. hardcore fans) and the band/artist. The majority of the population who were casual listeners had to either tape the song they liked while it was playing on the radio, or just suck it up and buy the album. Now, the majority of casual listeners, in addition to still having radio, now have tons of free sources to obtain music – the majority of which cannot be policed and will never be able to be policed completely unless you want to implement some sort of authoritarian censorship, and even then, people will find a way around it.

RE: Your second post:

Kobalt Music has made a name for improving transparency and tracking down fractions of a penny. If we improve transparency across the board, and stop abdicating to labels and groups that do not represent the artists (but only the labels and therefore their interests, which rarely converge with that of their artists) then artists have a better shot of navigating the present situation.

In terms of a tax – it’s more than what is being offered now. Obviously there are a variety of ways it could be approached, but I believe a more covert means of monetizing music, similar to streaming, but more regulated, with the ISPs, phone companies, etc. footing a blanket charge (to go along with the tons of other charges that people just accept on their bills – it doesn’t even have to specifically say ‘music’ on it, in fact, it’s preferable that it does not) to every customer along with stream payouts similar to streaming companies now, is at least an IMPROVEMENT on the current system. Again, the goal is NOT to recreate record sales or download sales, but to monetize however and wherever possible.

A music union run by artists for artists. Yes, ASCAP/BMI/SoundExchange represent them in a sense, but many artists have complaints with those organizations. To my knowledge, they’ve largely been unsuccessful in achieving any sort of reforms and often capitulate along with the labels.

RE: Your third post:

With respect, saying you’re ‘an idealist’ is a cop out. Be an idealistic when it comes to creating your music and performing live.

I don’t believe anything of what I have suggested is not idealistic in a way. After all, I am advocating for new ways of approaching the music industry (idealistic), approaching monetization (idealistic), and striving toward true artist-run collective representation (idealistic).

I’d argue that many in the music industry, including yourself based on your posts, are happy to be idealistic when they agree with the ideas, but the declaration that I have made that the days of selling millions upon millions of albums for $20 a piece is dead and gone, and probably never coming back, is unpleasant for many who have been in the music industry far longer than I.

I’m realistic in that I don’t think it’s particularly helpful or productive to continue trying to shove a square peg into a round hole. The definition of insanity is said to be doing the same thing over and over again and expecting a different result. I vehemently believe that you cannot approach the music industry like record sales are coming back and you cannot market albums like it’s still 1997.

I suppose where myself and others my age entering the music industry – who many professionals have lamented that we will never know what a ‘platinum’ or ‘gold’ album is – have over those same people is that many of us have little connection to the old music industry. I remember going to record stores as a child, and although I do miss that experience, I certainly do not miss being forced to sell my sole to a corporation just for a chance to be a professional musician and artist. I don’t look at the old music industry with rose-colored glasses, and frankly, it was the old music industry that made a fair amount of mistakes (again, not justifying tech companies) that accelerated the decline of music sales and revenue. The labels made a huge mess for future artists and clearly have no intention of paying it forward or trying to create a healthy music industry for anyone but themselves and their parent companies. For better or worse, it’s up to the next generation to not make the same mistakes.

All in all, I don’t think there will be a silver bullet for the music industry. Gone are the days of beaming a song on the radio or MTV and boom, there you go, for the majority of artists on labels or independent. Ultimately, you have to play the long game – especially as a new artist – and treat your band as a small business, connecting with fans and being smart about your choices.

Accepting the facts as they are and moving forward from there is the only way to go about surviving as an artist in 2016. No one else is going to do it for you.

Interesting that we often see people/artists posting opinions on here and I can’t ever remember seeing one praising youtube or google.
They all seem to tell stories of how the way the aforementioned’s system doesn’t work for them.

Also interesting that for every artist saying all of that, there will be a number of people responding to these articles and comments telling us that the artists are wrong and google are OK and are not doing anything wrong.

Just a question, but how many of you people supporting google/youtube on here are actually artists, musicians, “content providers”?
How many of you can actually qualify your statements with real-life experience of living, working and paying bills in this music industry 2.0?

Disclaimer: I work for Pandora Media. None of the views being expressed in these comments or anywhere else on the DMN News Site are the views of my employer (Pandora Media). These words and thoughts are strictly my own, and I would appreciate the common courtesy to respect that fact. Thanks – John Drefahl

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I could probably ramble on and on about this business model versus that business model, but it really doesn’t matter. I don’t think the problem lies with current steaming technologies out there, or with most of the business models in their corrupted form. It comes down authoring a new media, data rights and provisioning standards. One that any software developer can use to build special content packages, that then can be used by content providers to package an publish their content within a distributed network. The payload metadata would basically include all the rights information needed for that published package. This leaves all the percentages and rights to the user. They may not care, they may demand a minimum.. Its up tho the artist to make and manager his or own business systems, or use something like Next Big Sound. This DRM Protocol layer will basically just run as a daemon process ontop of the normal network. It, in itself could be a decentralized public distributed network, or a enterprise based corporate deployment where controlled distribution is done. None less. Just think of a rights system as ubiquitous as DNS is today. That is ultimately where I think this is all heading.

Its s duel edged sword though. Such network level protocol could free the worlds collective voices all at once, or silence them if controlled by a tyrant. Packet Provisioning and authentication is how things will be done. How information will be managed and controlled… and ultimately distributed.